Shareholders at Berkshire Hathaway will vote on a Sudan divestment proposal in May--the first time a socially responsible investing (SRI) proposal regarding the violence-beleaguered African country will be on the proxy at a U.S. company.

The proposal, submitted by stockholder Judith Porter, asks the company to consider divesting its shares in PetroChina, a Chinese oil subsidiary whose parent company has mining, refinery, and pipeline operations in Sudan.

Porter, who owns 10 class-B Berkshire shares, wants the company to stop investing in "any foreign corporation or subsidiary thereof that engages in activities that would be prohibited for U.S. companies by Executive Order of the President of the United States."

Since 1997, U.S. firms have been forbidden to operate in Sudan, but the law says nothing about investment in foreign companies that conduct business there.

Berkshire originally obtained permission from the Securities and Exchange Commission to exclude the proposal on the grounds that the wording was "vague and indefinite." However, Berkshire Chief Executive Warren E. Buffett, who has said that he opposes the proposal, decided to put it on the proxy at the company's May 5 annual meeting to assess investors' views on this issue.

Berkshire management said in a Feb. 21 statement that PetroChina does not do business in Sudan. However, Berkshire acknowledges that PetroChina's parent company, the China National Petroleum Company (CNPC), does.

CNPC, which is owned entirely by the Chinese government, owns a 90 percent stake in PetroChina. At the end of 2006, Berkshire maintained 2.3 billion PetroChina "H" shares, or 1.3 percent of the oil company's equity, making it the largest U.S. owner of PetroChina stock.

Berkshire management says that divesting from PetroChina would have little effect on the continuing operations by CNPC in Sudan. However, investor advocates from the Sudan Divestment Task Force (www.sudandivestment.org) wrote on Feb. 23 that CNPC's revenue-sharing agreement with the Sudanese government funnels most of the money made through oil production to Sudan's military.

The task force recommended that Berkshire begin constructive dialogue with PetroChina and CNPC to address the actions of the Sudanese government that the U.S. Congress declared in July 2004 to be "genocide."

*This article originally appeared in the April 5 edition of Governance Weekly.